Reoccurring issues like the Greek Debt Crisis remind us it is a small world after all. Unfortunately, a lack of progress over Greece’s debt problems is once again causing turbulence in the European Stock Markets. Clearly, the European Union is expected to experience the fallout of Greek economic troubles, because Greece is part of the European Union and shares a currency with the rest of the Eurozone. Much of the International Community will, however, also feel the ripple effects of Greek’s economic woes.
It can be somewhat puzzling as to why a small, poor nation like Greece can have such a far-reaching impact on the rest of the globe, especially when the troubles of a highly populated nation like Pakistan or a closer nation to the US , such as Mexico, can go unnoticed. The relationships poor countries like Greece enjoy with rich countries such as Germany determines their ability to affect the rest of the world. On the other hand, globalization is to blame for the interdependency that allows national and regional issues to affect the International Community.
Globalization is more than just a buzzword from the 90’s. For many who have experienced the ill-effects of globalization, the globalization process is seen as something to be rejected and resisted. In reality, globalization is a naturally occurring social process that has increased access to and the interaction of all the cultures and Peoples of the world for millennia. It cannot be stopped without a collapse of modern civilization, but it can be accelerated to the point society cannot adapt to the ill-effects of globalization.
During the 1990’s, the formation of the European Union and the embrace of free trade pacts like NAFTA serve as examples of public policy shifts that accelerated the globalization process. The truth is that the economies of the world would have become increasingly interconnected even without these major public policy initiatives. On the other hand, changes like the outsourcing of more traditional jobs and industries would have occurred more slowly due to far less economic pressure, thus affording domestic economies time to develop new labor-intensive industries.
Meanwhile, the Greek economy would have likely grown increasingly connected to major European powers due to its proximity. The difference is that market forces would have driven industry into Greece as demand for Greek goods and services changed. Instead, Greece’s financial sector was transformed and empowered to indebt itself in the hopes of artificially stimulating the Greek economy. In many respects, the Greek economy is struggling to overcome its addiction to European money, because its membership in the Eurozone created an artificial economy.
Looking back to the 2008-2009 Great Recession, the collapse of the US Housing Market and Credit Crunch were the results of an artificial economy. Not only is the US National Debt beyond unsustainable, personal debt is a magnitude worse thanks to inflation, stagnant income growth, a.k.a. wealthy disparity, and the increased need for credit to supplement living standards. Similar, if not worse, debt issues threaten much of the developed world. What this means is that much of the $75 trillion global economy is imperiled by artificial stimulus that will eventually lead to a far-reaching crash, if not corrected.
Because accelerated globalization accelerates increasing costs of goods, i.e. devalues currency, helps redistribute wealth to the global wealthy elites, and puts downward pressure on wages, it has helped create an unsustainable global economy fueled by debt. In other words, it has prevented market forces from reshaping the global economy in a more sustainable way that addresses the actual demands of global consumers. Accelerated globalization, which is what a free trade agreement like the Trans-Pacific Partnership would cause, cannot solve the world’s economic woes. It requires the world to recalibrate public policy and global trade to focus on the tangible needs of the real economies.
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